Jan Cameron

Postie Plus Group's history as a listed company has been a sorry saga and I'm not holding my breath for anything much to change. That's despite the company promising to deliver a "modest" profit for the year ending July, providing the recession gets no worse.

The commentary around its latest results was mostly upbeat: a slightly smaller first-half loss, a 30% inventory reduction and a 32% debt reduction.

A closer look is far from reassuring. Yes, the bottom-line loss for the six months ended January narrowed to $2.7 million from $2.9m. However, the previous first half included the since-offloaded Arbuckles manchester chain's losses and the company's interest bill was down 31%. Stripping out these two items, the company's operating loss blew out to $3.1m, up 23.5%. Sales were down 5%, although the company was able to point to an improving trend: first-quarter sales were down 8.8%, but second- quarter sales were down only 2.3%. Inventory does seem to be under better control: it was $24.9m at January 31 compared with $35.3m a year earlier - it was up from $20.9m at July 31, but the company's second half is traditionally its strongest, so having more stock heading into it makes sense.

Ron Boskell, who was on holiday last week, has been chief executive since October 2005 and with the company since 2002, ahead of the September 2003 float. It isn't hard to argue he was handed a poisoned chalice. The company was a grab-bag of five retail chains thrown together in an unseemly hurry and floated when it was still an incoherent mess, and many of the strategies aimed at bringing it together simply didn't work.

And its warehousing and distribution system was based in Westport - a more inaccessible base would be difficult to find. It reflected the flagship Postie+ chain's origins as a Westport- based mail-order business.

The company was slow to move, shifting it all to Christchurch in bits and pieces. It finally bit the bullet in January last year and shifted the last bits, the hardly unimportant store replenishment functions, to Christchurch, a move which is saving it about $1m a year in logistics' costs.

Chairman Peter van Rij gave a strong indication then of what took the company so long. "If it was a question of the heart making the decision, we would not be moving.". Implementing adequate information systems took a couple of tries, but was finally achieved in April 2007. And it's now free of Arbuckles continuing losses and pared down to just two chains, the 79-store Postie+ and the 21-store BabyCity, and its Schooltex school uniforms business, which supplies more than 1500 schools.

Boskell has always acknowledged a key change needed to be better stock control. When he took over, the company was buying stock only twice a year and anything it didn't sell was put into storage to be recycled again the following year. The combination was nasty: customers were offered tired goods and the company incurred high storage costs. The aim now is to have fresh stock in all stores every six to eight weeks to give customers a reason to return.

But it seems to be taking Boskell rather a long time to get it right. In January 2006, just after he took over, inventory stood at $29.5m and it sank to $25.8m the following July. However, by July 2007, it had blown out to $37.2m and was still at $35.3m in January last year, well after the new information systems were up and running.

In March 2007, Boskell was talking about the company having a "clean stock position" but it clearly didn't. Van Rij told last November's annual shareholders meeting about the company's "crippling stock overhang from poor buying decisions in 2006".

Perhaps Boskell does have it right now. The results posted earlier this month assured shareholders "the group has entered the second half with a clean stock position for the crucial winter selling period" and that profit margins are lifting. Possibly shareholders are taking him at his word, for now. The share price hit a 20 cent nadir in February, but was trading at 32c last week. More likely it's Kathmandu founder Janet Cameron's continuing interest. Last year she bought all Arbuckles stock and took over 13 of the stores to turn into her Dogs Breakfast Trading Company stores and, earlier this month, she announced she had lifted her stake from 15% to 17.8%.

* Jenny Ruth is a freelance financial journalist and a columnist for The Independent.

The longstanding Arbuckles brand is about to fade into oblivion as the manchester chain's new owner, Jan Cameron, liquidates stock in preparation to close the stores.

Ms Cameron, the former Kathmandu owner, is expected to use the sites to launch a new chain of homeware stores called Dogs Breakfast Trading Company, which she has already set up in Australia.

Ms Cameron, who has a wealth of $320 million according to the 2008 National Business Review Rich List, bought Arbuckles two weeks ago for $4 million from Postie Plus Group. She took over 13 stores throughout New Zealand, bought all the stock and re-employed most of the staff. Those stores were now advertising closing down liquidation sales.

Arbuckles was founded 35 years ago by John Arbuckle, who started the chain out of a van in Christchurch. He and his wife Vicki sold it to Postie Plus in 2003 for $9.5 million.

Ms Cameron could not be reached directly, but a spokeswoman at Arbuckles' head office in Christchurch said she had told staff she did not want to comment.

Dogs Breakfast Trading Company sells furniture, homeware, crockery and premium pet food, according to the store's Australian website.

Ms Cameron owns a chain of five homeware stores in New Zealand, called Nood. It was not known if she would use some of the former Arbuckles stores to expand Nood.

Pumpkin Patch shares are continuing to surge in value after multimillionaire Kathmandu founder Jan Cameron disclosed a 6.3 per cent interest in the children's clothing retailer.

The shares are now up 12 cents, or 8.5 per cent, to $1.52 from the four-year low of $1.40 hit on Friday shortly before the reclusive Tasmanian resident Cameron disclosed her holding. Cameron is the second wealthy retail investor in a few months to disclose a holding in Pumpkin Patch. The majority shareholder in Briscoe Group, Rod Duke, has built a 10 per cent stake.

Pumpkin Patch chairman Greg Muir said today he was "comfortable" with the new investors. "It is two well placed New Zealand investors who obviously recognise that the company is undervalued at the moment." On Cameron, Muir said: "She's been building that [stake] over many months - we've known about that. We haven't had any dialogue with her at all. It is for her to discuss. We are quite comfortable. We've got no issues with it."

While the moves by both Cameron and Duke will lead to speculation that one or both may seek to assert influence on the future running of Pumpkin Patch, Muir said he believed both might be passive investors. Neither had sought a seat on the board at this stage. "They've certainly made no representations to us in that respect, but I can't answer what their intentions are."

The moves from both the investors come as Pumpkin Patch, a former sharemarket darling, has seen its share price pounded as investors worry about apparent speed wobbles the company is hitting in its US and British expansion. There is also concern about its stock levels, which have risen sharply this year and its debt levels, which may now be as high as $95 million from virtually nothing two years ago.

Cameron sold Kathmandu to private equity partners Goldman Sachs JBWere and Quadrant in 2006, reportedly for about $275 million. Subsequently she has built a 15 per cent stake in Postie Plus. She also recently bought the Arbuckle's stores from Postie Plus. In addition she has opened five homeware stores in New Zealand under the brand name Nood (New Objects of Desire).

Pumpkin Patch's shareholder register is now getting crowded. The biggest individual shareholder is still believed to be South African investor Setar Motani, with about 12 per cent - though this shareholding has reduced in the past few years. Another investor who has reduced his shares since the company floated in 2004 is managing director Maurice Prendergast, who currently owns about 6.2 per cent, down from 8 per cent a few years ago. Fisher Funds Management has recently sold down its stake to around 6 per cent as well.

Pumpkin Patch shares were listed in mid-2004 at $1.25 a share. They rose to as high as $4.95 on a wave of enthusiasm about the company's moves to become a global brand. However, in more recent times the expansion into the US and Britain has appeared to hit speed wobbles.

Market expectations had been for a profit this year of about $22 million to $23 million, down from $27.6 million. But it is likely analysts will further trim earnings forecasts after a recent Asian investor roadshow presentation by the company that talked about tough conditions in Britain and the US.